Mayor, CTA privately talked about $300 million no-bid deal

Plans fell through after disclosures about poor quality work surfaced

Marc Boucher, from left, Bombardier vice president of operations; CTA President Forrest Claypool; and Mayor Rahm Emanuel check out a new rail car in November. The cars were later taken out of service because of defects. (Heather Charles, Chicago Tribune)

The Emanuel administration and the CTA engaged in private discussions on a $300 million no-bid contract with the maker of the transit agency's new rail cars, but the talks collapsed amid disclosures about the poor quality of the company's work, the Tribune has learned.

Bombardier Transportation's pitch to build and operate a South Side rail car overhaul facility on vacant city and CTA land in a CTA rail yard took off in May 2011 after Mayor Rahm Emanuel was elected, CTA officials told the newspaper.

The talks over the public-private partnership continued for 10 months, "in keeping with the mayor's priority of creating jobs and generating economic development," CTA spokeswoman Molly Sullivan said.

CTA lawyers had been working to justify the unusual practice of awarding such a large contract without competitive bids, the transit agency said.

But the city and CTA backed away from the talks in recent weeks amid Tribune reports that disclosed defective-parts problems with Bombardier's ongoing production of 706 new rail cars under a contract that totals $1.14 billion.

First word of the previously undisclosed discussions with Bombardier comes as Emanuel is asking the City Council to give him broad authority to partner with the private sector to build everything from schools and sewers to ports and railways. The details uncovered by the newspaper highlight both the potential benefits and pitfalls of such public-private partnerships.

A vote on the mayor's proposal to create an "infrastructure trust" could come as soon as next week. Emanuel's plan calls for a panel of business experts appointed by him who would identify infrastructure projects that would be built for the city and find ways to fund them other than the traditional practice of government borrowing money and paying off the debt with taxes. The panel's meetings and deliberations would not be subject to open meetings or public records laws.

Emanuel's press office repeatedly refused to answer questions about what involvement the mayor had in the Bombardier discussions. On Tuesday his top spokeswoman would only acknowledge the mayor was initially attracted to the Bombardier plan because of potential jobs. She said the mayor soured on the idea because of the no-bid aspect, without saying when that happened.

"The mayor doesn't do sole-source deals," said Emanuel communications director Sarah Hamilton. "It was a nonstarter. It was never going to happen."

CTA officials said the no-bid component had nothing to do with scuttling the deal and that Emanuel had encouraged it all along.

"Very early, even before he took office, he asked me how we might turn this billion-dollar expenditure into an opportunity for jobs," said CTA President Forrest Claypool, who was appointed to the post shortly after Emanuel's inauguration. "So when I took office we took that mandate and ran with it."

Claypool described the Bombardier proposal as a "very, very rare potential for a win-win. The goal was a noble one. "

As recently as November, a top Bombardier executive who was in Chicago for what was billed as the official rollout of the rail cars discussed with an enthusiastic Emanuel the company's plans to build the repair facility, according to a CTA source.

The CTA routinely seeks competitive bids on major projects, but Sullivan said the agency had compelling economic reasons to consider dealing exclusively with Bombardier.

Because there are no Chicago facilities equipped to perform midlife overhauls on rail cars, the CTA has to pay to send its aging cars elsewhere, Sullivan said. The Bombardier proposal would have saved the CTA those shipping costs while creating much-needed jobs on the South Side.

The Montreal-based company proposed building the facility on its own at the CTA's 63rd Street Lower Yard at Calumet Avenue in the Washington Park neighborhood, on land it would lease from the city and transit agency for as little as $1 a year.

In return, the company would be awarded a multiyear, $300 million contract to update 20-year-old rail cars at the facility, CTA officials confirmed. The yard is adjacent to the CTA Green Line East 63rd branch tracks and nearby freight main lines.

By allowing Bombardier to use proprietary information to create a uniform rail car design, the CTA's older trains from another maker would be configured with many of the same technical specifications on the new trains from Bombardier — resulting in greater operational and maintenance efficiencies, Sullivan said.

As an added economic incentive, the repair shop could attract business from the state of Illinois and possibly surrounding states, which are planning to buy 110 mph passenger trains for Amtrak routes. Bombardier was recommending that a maintenance yard at the Chicago hub of Midwest operations would be needed to service the high-speed trains, according to CTA officials who were close to the talks with Bombardier.